2023 HVAC Tax Credits – Inflation Reduction Act

As of 1/1/2023 homeowners can qualify for up to $2,000 in federal tax credits when you install eligible heat pumps and air conditioners in your principal residence.

HVAC TAX CREDIT QUICK REFERENCE CHART*

*Regional Standards for South Region (including Arizona)

Tax Credit Equipment Type SEER2 EER2 HSPF2
Up to $2000 Heat Pump Split HP 15.2 11.7 7.8
Ductless HP 16.0 12.0 9.0
Packaged HP 15.2 10.6 7.2
Up to $600 Air Conditioner Split AC 16.0 12.0 N/A
Packaged AC 15.20 11.50 N/A


Tax Section 25C, Nonbusiness Energy Property Credit

Effective Jan 1, 2023: Provides a tax-credit to homeowners equal to 30% of installation costs for the highest efficency tier products, up to a maximum of $600 for qualified air conditioners and furnaces, and a maximum of $2,000 for qualified heat pumps.

The most commonly installed system in Arizona are Air Source Heat Pumps, which do qualify for the tax credit up to $2,000 (up to 30% of the total project). To receive the credit, the system must meet or excel the efficiency ratings outlined in the above chart.


FAQs:

Q: Does my system that I bought before 1/1/2023 qualify for this tax credit?

A: No, only equipment installed after 1/1/2023 that meets the efficiency rating will qualify for the tax credit.

Q: Do I need to fill out any forms to receive the credit?

A: Yes, you must submit IRS Form 5695 and include it with your tax return. We recommend you consult a tax professional to ensure you receive the maximum benefit.

2023/03/25